SYDNEY, AUSTRALIA: Perpetual Limited (ASX:PPT) has entered into a binding Scheme Implementation Deed with Pendal Group (ASX:PDL) under which Perpetual intends to acquire 100% of shares in Pendal by way of a Scheme of Arrangement.

The combination of these two highly aligned businesses will create a leading global asset manager with significant scale, a broad array of high-quality investment strategies, a global leader in ESG investing and a materially enlarged global distribution team, supported by Perpetual’s high-quality wealth management and corporate trustee businesses.

The combined group will be better positioned to accelerate future growth through the expansion of investment and distribution capabilities, while providing the scale benefits associated with a significantly enhanced global operating model, delivering greater shareholder value for both Perpetual and Pendal shareholders.

The transaction would see Perpetual’s AUM increase from A$90 billion to pro-forma Assets Under Management (“AUM”) of A$201 billion, with AUM covering Global, US, UK, European and Australian equities, Multi Asset and Cash and Fixed Income strategies.

Tony D’Aloisio, Chairman of Perpetual and who will be Chairman of the combined group said, “We are pleased that Pendal’s Board of Directors has unanimously recommended that Pendal shareholders vote in favour of the Scheme, in the absence of any superior proposal and subject to the independent expert’s opinion that the scheme is in the best interests of shareholders.

“Our Board and management see this as a defining acquisition that brings together two of Australia’s oldest and most respected active asset management brands to create a diversified global asset management business of substantial scale. We believe the combination represents a strategically and financially compelling opportunity for both sets of shareholders, with our respective strategic ambitions realised significantly sooner than would otherwise occur.

“Rob Adams, Chief Executive Officer and Managing Director of Perpetual will lead the combined group and up to three directors of Pendal will be invited to join the Perpetual Board.”

Mr Adams said, “The combined group will have premium, respected brands domestically and globally, strong cultural alignment based on the continued investment autonomy within each boutique, will be a global leader in active ESG asset management and will have a materially enlarged global distribution team to drive improved future growth.

“We believe the multi-boutique model that both firms espouse is the ideal model for active asset management, bringing together the strengths of both traditional and pure boutique business models, delivering scale, high-quality investment teams backed by deeply resourced distribution and global governance frameworks. We are delighted with the strong support by Pendal’s portfolio managers for the transaction and our model.

“We look forward to working collaboratively with the Pendal team, to supercharge our next growth phase and further enhance shareholder value together.”

The acquisition will be effected via a share exchange with every 7.50 Pendal ordinary shares exchanged for 1 newly issued share in Perpetual and $1.976 cash per Pendal share. This implies an offer of $6.549 per Pendal share. The scheme consideration will be reduced by the amount of any final FY22 Pendal dividend.

Based on the undisturbed share price this offer represents:

• a 46.0% premium to Pendal’s share price at close of 1 April 2022 of $4.48;
• a 42.6% premium to Pendal’s 1 month VWAP11 to 1 April 2022 of $4.59; and
• a 33.6% premium to Pendal’s 3 month VWAP9 to 1 April 2022 of $4.90.

Based on the last closing share price of Perpetual at 24 August 2022 of $30.30, the offer implies an offer price of $6.02 for each Pendal share.

Perpetual and Pendal shareholders are expected to own approximately 53% and 47% respectively of the combined group shares on closing, based on the current number of shares outstanding.

The cash component of the offer totalling A$757 million, will be funded by a new debt facility. The new debt facility will also re-finance Perpetual’s existing debt facility and includes undrawn headroom for liquidity management purposes.